Divorce is never a particularly pleasant subject to write about. But, it’s necessary, and as financial planners, we are here to help clients look beyond the immediate unpleasant circumstances. The goal is initially to guide people, helping to secure their financial future.
With all clients, no matter their circumstance, the financial planning process starts with defining short and long-term aspirations. We understand this can be especially challenging during turbulent times, which is why we take great pride in being affiliate members of Resolution – the largest UK community of family justice professionals.
Why is this so important now?
As you know, divorce law is changing to reflect societal shifts. Under current rules, a spouse must allege adultery or unreasonable behaviour for proceedings to immediately start. A simple breakdown in the marriage can take much longer but this is set to change.
Statistics from the Office for National Statistics show that unreasonable behaviour was the most common reason for opposite-sex and same-sex couples divorces; 52% of wives and 37% of husbands petitioning on these grounds in opposite-sex marriages, then 83% of divorces among women and 73% among men.
As reforms will put an end to the ‘blame game’, we can take a much more constructive approach to the situation.
In term of divorce rates, the number of opposite-sex couples has decreased 4.9% from 2016, but the number of same-sex couples divorcing has (unsurprisingly given the amount of time same-sex marriage has been legalised) increased 74%.
Interestingly, the number of older people divorcing has increased too, with numbers higher in 2017 than they were in 1993. Possibly due to an ageing population and people marrying later in life, sharing the finances of older divorcees, whose financial circumstances are likely to be more complex, can present additional challenges.
The Resolution code
You may well be aware of Resolution’s code of practice. It goes without saying that we whole-heartedly believe in reducing conflict, acting with integrity and supporting families, but the point that really stands out for us, is to;
- Help clients understand and manage the potential long-term financial and emotional consequences of decisions
Ultimately, their goals may have changed, even if the situation isn’t immediately clear. Aspirations are no longer intrinsically linked to their spouse or civil partner; it’s time to reassess what clients want from life and how we’re going to achieve it.
The process can be an emotional roller-coaster and it’s common for a client to feel less secure when the dust has settled. This can be emotive and material, with financial insecurity. A long-term plan gives people an opportunity to take back control, reducing the likelihood of emotive financial decisions. This can help improve financial security, as well as wellbeing.
How we work
At Sovereign, we have a six-step planning process focussed on the person and their desired lifestyle. Once we’ve defined a client’s post-divorce aspirations and objectives we can put a plan in place to achieve them. This starts with;
- Initial meeting: We will take the time to get to know your client, their new financial challenges and your long-term objectives. We explain our services, answer any questions and outline our charges so they are clear from day one.
- Discovery: This is where we collect all the information we need to carry out a comprehensive analysis of the client’s new financial situation. This information will be used to identify any shortfalls and immediate priorities. It will also help us create a personal cashflow forecast and formulate the best course of action to take.
- Research and recommendations: During this stage, we will create a cashflow forecast and balance sheet so that the client has a clear picture of their post-divorce financial position. We will also provide specific recommendations to help them achieve their objectives. An investment portfolio tailored to those objectives and their tolerance for risk will then be constructed as tax-efficiently as possible.
- Present recommendations: Once our research and recommendations have been finalised, we will meet again to talk you through their bespoke financial plan and cashflow forecast. We will explain how our recommendations have been designed to make their financial objectives a reality.
- Implementation: Leave the rest to us. We carefully track the progress of each application and keep our client informed throughout. We’ll happily collaborate with solicitors, lawyers and accountants during this process.
- Ongoing review service: It doesn’t stop there; ensuring that everything stays on track is every bit as important as the initial advice and recommendations. We schedule regular reviews to assess the progress made towards their objectives. If necessary, we’ll make adjustments to reflect any other changes in their situation, needs or objectives.
As Chartered, independent financial planners, our areas of expertise do include divorce and tax planning but, naturally, extend further. However, as proud affiliate members of Resolution, we have specific experience helping divorcing couples and divorcees plan for a new future. If you or a client is in this circumstance, we’re here to help.